Fed contender seized the day, and dollars, in private sector

Share with others:

When Lawrence H. Summers left his job as President Barack Obama's top economic policy adviser at the end of 2010 to return to Harvard University, one of his first steps was to set up a roster of part-time positions that would touch on just about every corner of the financial world.

Today, the Obama administration is considering nominating Mr. Summers as the next chairman of the Federal Reserve. If the White House does so, Mr. Summers' financial disclosure -- including his recent consulting jobs, paid speeches and service on company boards -- will be one of the hottest documents in Washington. Before his tenure in the Obama administration, Mr. Summers had accumulated personal wealth of at least $7 million; the last two years have most likely added considerably to that.

In addition to rejoining the Harvard faculty in 2011, he jumped into a moneymaking spree. His clock was ticking partly because he knew that the Fed chairmanship, to which he has long aspired, was likely to open up in early 2014, when Ben S. Bernanke's second term will come to an end.

"With Larry, my wife always says that it's hard to be happy if you want to have the most money because you'll never have the most money," said Jeremy I. Bulow, an economics professor at Stanford University. "He's kind of been going about his life just on the basis of 'who knows what's going to come next?' and just sort of maximizing his experiences, given the opportunities in front of him."

The opportunities have been many over the last two years. Mr. Summers, 58, has been employed by the megabank Citigroup and the sprawling hedge fund D.E. Shaw. He works for a firm that advises small banks as well as the exchange company Nasdaq OMX. And he serves on the board of two Silicon Valley startups: both financial firms that may pursue initial public offerings in the next year.

Wall Street experience is not unprecedented for a Fed chairman. The departing chairman, Mr. Bernanke, has never been employed on Wall Street, spending most of his career at Princeton. But Alan Greenspan worked in investment banking early in his career, and Paul A. Volcker did some work at Chase Manhattan Bank.

Mr. Summers declined to comment. But some senators are raising questions about potential conflicts of interest and noting his role in the repeal of the Glass-Steagall banking law, which many critics say contributed to the financial crisis.

"I start from a position of being extraordinarily skeptical that Larry Summers is appropriate to chair the Fed," said Sen. Jeff Merkley, D-Ore. "I have serious doubts that Summers, who as a committed deregulator drove policies that set the stage for the Great Recession, is the right person for a key regulatory position."

The job that is likely to generate the most scrutiny for Mr. Summers is his work with Citigroup, which was rescued from the brink of bankruptcy by the federal government's bailout. Though he does not have an office there, two people with direct knowledge of the matter said he was a regular consultant.

Some of Mr. Summers' employers used to work with him in government.

"I don't think of him as an employee, I like to think of him as an adviser," said Lewis A. Sachs, a former Treasury official who runs a Maryland firm called Alliance Partners that is backed by BlackRock and BlueMountain Capital.

Mr. Sachs, a frequent visitor to the White House and Treasury, said Mr. Summers' financial work would make him a better Fed chairman. "It will certainly give him a lot of windows into different parts of the financial system, different parts of the economy," Mr. Sachs said.

Mr. Summers not only has a variety of professional contacts on Wall Street, he has also made contacts in Silicon Valley.

He serves on the board of two startups. The chief financial officer of one of the companies, Square, a mobile payments company, described Summers in a statement as "a really important member of our team."

The other startup is Lending Club, which facilitates peer-to-peer loans.